Steel demand remains weak as many end-users cut down purchases; dealers are stocking cautiously
Supplies expected to be hit globally; hot-rolled coils hit record Rs. 65,000/ tonne
Steel companies have raised prices by Rs. 5,000-8,000 a tonne across products, including hot and cold rolled coils, TMT bars and wire rods.
Prices of hot-rolled coils have hit a record high Rs. 65,000 a tonne as steel companies passed on the sharp increase in raw material prices, said a steel company official. The Russian invasion of Ukraine and the subsequent economic sanction on the former have pushed up input costs, including that of fuels.
Shivam Bajaj, CEO, Avener Capital, said Russia is one of the largest exporters of steel and the sanctions imposed on it will result in a short-supply, globally. Post clarity on the Russia-Ukraine situation, steel prices may cool, he added.
In contrast, the steel demand across sectors remains weak as many end-users have cut down on purchases. Dealers are also stocking up cautiously though they do not expect steel prices to crash immediately after the war.
While the economic growth prospects of India may not have a high linkage with the emerging geopolitical risks, the sanctions on Russia by many developed nations can disrupt the global commodity markets and supply-chains of many key raw materials, putting indirect pressure on the supply side and exerting inflationary pressure across the sector, said SK Gaikward, CEO, Smart Steel Distributors.
It may take several months for the supply chain to be reinstated fully and till then prices are likely to remain elevated, said a report by Motilal Oswal Financial Services. Sea freight and insurance, too, are likely to shoot up, while disruption in nickel supply could keep both nickel and stainless steel prices on a high, it added.
Demand for finished steel in India slipped 9 per cent month-on-month to 9.2 million tonnes in February while production dropped 4 per cent to 9.5 mt, according to latest Steel Ministry data. However, steel exports rose 42 per cent m-o-m to 1.16 mt, the highest since last September, on higher demand from European markets with China on a week-long Lunar New Year holiday.
Crude steel production by integrated steel producers — SAIL, Tata Steel, JSW Steel, JSPL, RINL and AMNS India — during April-February accounted for 62 per cent of the total output, and their finished steel output for 57 per cent.